WHO SHOULD Monitor the Internet? For some time now, the issue has been engaging businesses, regulators and activists. Social networks spend billions on moderating content posted on their platforms but are still criticized for either not removing enough toxic material or stifling free expression. You are not the only one grappling with the problem. Banks and credit card companies also play a bigger role in what is said and done in public places – to their own and that of their customers.
Now the line of censorship is being extended further to the pornography business. Beginning October 15, adult websites worldwide will have to verify the age and identity of everyone shown in a picture or video, as well as the ID of the person uploading it. You need to have a quick complaints process and review all content before posting. These requirements are imposed not by regulators, but by Mastercard, a credit card giant.
Websites can choose not to use Mastercard at any time. However, since the company processes about 30% of all card payments outside of China, it would be costly. Visa, which handles another 60% of payments, is also stricter with adult websites. And the trend goes beyond porn. In the darker corners of the internet and in industries where the laws are unclear or out of date, financial firms act as de facto regulators.
“Payments have become a tool of national and international politics since the turn of the century,” says Aaron Klein of the Brookings Institution, a think tank. After the September 11, 2001 attacks, America introduced new anti-money laundering rules and more targeted sanctions. This system – a “precision-guided ammunition of the 21st
Around the same time, governments began to seek help from domestic banks. An craze for online poker led to the Unlawful Internet Gambling Enforcement Act of 2006 in the United States, which passed responsibility for blocking transactions not to the ISPs that allowed access to poker sites, but to the companies that made the payments . When most American states legalized the cannabis industry in some way, its growth was stifled in the bud by federal laws preventing banks from trading marijuana moguls.
The transfer of enforcement obligations to companies relieves the taxpayer of some of the costs. Compliance departments in companies have now bloated. It’s not uncommon for large banks like HSBC or JPMorgan Chase to employ 3,000 to 5,000 specialists focused on fighting financial crime, and more than 20,000 in total on risk and compliance. In 2017, Accenture, a consulting firm, estimated technology companies had around 100,000 content moderators.
The effect is also to relieve politicians of difficult decisions. “Political decision-making involves forming coalitions and reaching social consensus on difficult issues. That has become more difficult in America in the last few decades, ”says Klein. When banks refuse to deal with a customer in an area such as porn or gambling with a customer because of “reputational risk”, it sometimes means “a banking regulator”. [has been] whispers to them, ‘We don’t like you in this business,’ ”says Greg Baer of the Bank Policy Institute, an industry association in America.
Activists have also exerted pressure, which has resulted in companies dropping unpopular customers. In January, after an outcry over an uprising in the U.S. Capitol, Deutsche Bank and Signature Bank ended their dealings with Donald Trump, the then president whom Signature asked to resign. Mr Trump has likely found other banks willing to work with him. But in some industries enough banks have turned up their noses that this can be a problem. In August, OnlyFans, a site known for its adult content, said it would no longer allow explicit material due to pressure from partners such as BNY Mellon, Metro Bank and JPMorgan (none of whom commented). In the end, the ban was lifted after outraged pro-porn activists turned out to be even louder than the antis.
Visa and Mastercard’s near duopoly on card payments makes their decisions more powerful – and the companies are the main targets for protesters. In 2019, SumOfUs, a leftist advocacy group, tabled a proposal at Mastercard’s annual meeting aimed at stopping payments to far-right groups. (The proposal was rejected.) Thirty-four women are suing Visa along with the owners of Pornhub, an adult website that allegedly hosts disapproving footage of them. Illegal porn sites “care far more about their finances than the law,” says Laila Mickelwait, whose Justice Defense Fund helps victims of sexual abuse with trial. And when financial firms change their policies, it does so worldwide. Last year Visa and Mastercard discontinued Pornhub for hosting potentially illegal material.
Payment companies in particular face a philosophical dilemma. “On the one hand, they try to be very open, accepting, and ready to make payments for whomever. They don’t take a political or moral stance, ”says Lisa Ellis of MoffettNathanson, a research company. “But on the other hand, they also feel they have a very strong responsibility to make sure they don’t support crime.”
Visa and Mastercard both say that their guiding principle as a global company is local legality. (This can bring some surprises: a manager recalls being told by customers in a Scandinavian country that bestiality was legal there at the time.) Things are not always black and white. In 2017, after a far-right march in Charlottesville, Virginia, Mastercard stopped using its cards on websites that had made “specific threats or incitement”[d] Violence, ”but continued to dig into other sites labeled as hate groups. “Our standard is whether a trader’s activities are lawful, even if we disagree with what they say or do,” the company said at the time.
They have reason to be careful in gray areas. The liability risk of payment networks tends to be low because they operate at a distance from the merchants. But being named or accused of helping Nazis in a sex trafficking complaint doesn’t look good. For example, when working with a borderline adult website, there are “not many advantages and many disadvantages,” says Ms. Ellis. And in legally sensitive areas, it can be cheaper to issue a blanket ban than to search every difficult case. Banks could avoid countries that are not embargoed but have many people on the prohibited list “to minimize the hassle of determining whether every transaction is compliant,” says Jonathan Cross of the law firm Herbert Smith Freehills.
In policy areas where the law still has some catching up to do, financial companies can end up writing their own regulations. Some cases are harmless: Two years ago, Mastercard introduced rules for companies that offer free trials, according to which customers must be notified before payments can begin. But other policies involve real trade-offs between values like freedom of expression and security. Mastercard’s requirement that adult websites review content before it is published should help eradicate illegal material, but will likely also mean less legal nature. The company is proposing to block websites that use artificial intelligence to “nudify” clothed images, which is not against the law in most countries. Another company executive wonders whether such decisions should be made by governments instead. “Where it’s gray, who do you prefer to make the decisions?” He asks.
New dilemmas keep cropping up. Mr. Klein highlighted the growing problem of email fraud targeting vulnerable elderly people. Financial firms are under pressure to stop money transfers to crooks, but also to respect the autonomy of older customers. In March, a group of banks in Australia called for clearer legislation on the matter.
As long as legislation is lagging behind, financial institutions will find themselves in a difficult position: Either they will be accused of being “moral police,” as an executive puts it, or they will facilitate misconduct. As Richard Haythornthwaite, then chairman of Mastercard, told protesters at the 2019 annual meeting, “If it is lawful, we must respect this transaction. If it is something that goes against the current of society, it is up to society to stand up and change the law. ”